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HMRC cuts could lead to ‘catastrophic’ customer service collapse

Annual review highlights contractor failings

HMRC must prepare back up plans for the switch to digital services

HMRC must prepare back-up plans to avoid another ‘catastrophic collapse’ in customer service, according to an influential cross-party group of MPs.

In its annual review, the Public Accounts Committee said HMRC must avoid the mistakes of two years ago when a misjudged cull in call centre staff lead to taxpayers waiting an average of 47 minutes on hold. The situation was only resolved after HMRC hired 2,400 more staff in an embarrassing U-turn.

HMRC is obliged to reduce its staff by a third in the next three years, and plans to do so by moving more services online, but the committee is ‘not convinced’ that HMRC has strong enough plans in place to handle queries if the switch does not go as planned.

Though call waiting times are much better, the committee previously found customer service levels are falling on other measures, with 6,000 (8%) more complaints in 2015-16 than the year before. More worryingly, the vast majority (85%) of complaints about HMRC in 2014-15 were upheld. 

MP Meg Hillier, public accounts committee chair, said:  ‘HMRC’s senior management cannot afford to be complacent about the catastrophic collapse in customer service in 2014-15 and the first half of 2015-16, nor about what is at stake should their projections about demand for call centres prove wrong.

‘Contingency planning should not be an optional extra. By the spring, we will expect to see evidence that HMRC has agreed measures with the Treasury to ensure it is not left playing catch-up at taxpayers’ expense.’

A spokesperson for HMRC said it has invested significantly in customer service, hiring another 3,000 staff which are also available outside normal hours. As a result, it consistently answers 90% of calls within five minutes.

  • Our simple jargon-free online tax calculator allows you to work out your tax bill and submit it directly to HMRC.

‘Unnecessary hardship and suffering’ for tax credit claimants

The committee also criticised HMRC for its ‘complete failure’ to manage private contractors, as investigations supplied by US contractor Concentrix lead to ‘many’ people having payments denied after falsely being accused of fraud.

The Concentrix contract has since been terminated, but the committee says lessons must be learned to avoid similar problems in future.

Meg Hillier said: ‘We look forward to meaningful action to prevent a repeat of the failings embodied by its contract with Concentrix – a venture with appalling human consequences.’

Find out more: How to complain about poor service from HMRC – see our consumer rights guide

More tax relief data needed

The committee also wants HMRC to collect more data about tax relief claims to inform public debate and scrutiny.

The tax system is incredibly complex, and while HMRC does record statistics for 180 different types of relief, this only covers 15% of the possible reliefs that can be claimed.

The lack of information means parliament can’t see whether tax relief schemes are having the intended effects, or whether they provide value for money. The National Audit Office, to pick one example, recently found entrepreneurs’ relief cost the Treasury three times more than expected.

Similarly, the committee also wants more information in the public domain about the taxes paid by multinational companies. Under a recent agreement, HMRC will see more information about taxes paid by multinationals in other countries, though this will only be shared confidentially.

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